The divorce rate in America is currently around 50%. While many individuals have a variety of reasons for getting a divorce, few people think about the financial implications that result from divorce. Not only are attorney and court filing fees some of the costs to think about, but often times divorce causes a change in lifestyle. This means that costs can potentially span out for years, and it may take a while for some people to get back on their feet.

Legal Fees

One of the most common costs in a divorce is legal fees. The hourly rate for attorneys in America is around $100 to $250. Retainer fees can range from $8,000 to $12,000 depending on your geographical location and case. Another thing to consider is your assets will more than likely be worth less than their value. For example, if a divorce calls for a 50-50 split of assets, this means that your house will be worth 50% less than the market value because you are only entitled to half of the value. In the case that the house is awarded to a one person, this person will be solely responsible for paying the mortgage. This may be more of a financial burden than anticipated for some people.

Split Assets

Other assets such as bank accounts and investments may have to be split up as well. Investments may be liquidated at a loss before being divided between the two parties. Some individuals are required by the courts to pay alimony and child support. This can be a huge financial burden for the individual who is required to make these payments, which in most cases is the man.

Taxes

One of the most substantial financial challenges of a divorce is tax implications. When a couple transfers property in a divorce case, the transfer is usually non-taxable. However, all property received in a settlement will be held accountable for taxes in the future. In other words, when a property is sold for a gain, the individual that received the house in the settlement will be responsible for taxes on the gain from the day the house was purchased jointly, and not the day it was received in the settlement. Income tax laws and deductions are also different for single individuals than married individuals filing jointly. You may need to seek the advice of a Certified Public Accountant to assist you in filing your income taxes.

Bearing the Burden Alone

In addition, along with property acquired within a divorce settlement, comes the sole responsibility of maintenance, property taxes, insurance, and other bills. Individuals typically forget that everything that was handled by two parties in the past will only be handled by one person after the divorce. This often leaves individuals with burdens and responsibilities they were not prepared to handle.

The financial implications with divorce sometimes cause people to reconsider their decision. If divorce is inevitable, individuals should seek counsel from not only divorce attorneys, but financial advisors and tax attorneys as well.